Question 16 Figure 5-1 Price O Quantity Refer to Figure 5-1 in which S is the market supply curve and $1 is a supply curve comprising all costs of production, including external costs. Assume that th number of people affected by these external costs is large. If the government wishes to establish an optimal allocation of resources in this market, it should: Tax producers so that the market supply curve shifts left (upward). Subsidize consumers so that the market demand curve shifts left. O not intervene because the outcome is socially optimal. Subsidize producers so that the market supply curve shifts left (upward)